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Informist, Thursday, Oct. 17, 2024

 

By Rajesh Gajra

 

MUMBAI – Hindustan Zinc Ltd.'s revenue growth for the September quarter is expected to be driven by growth in production and upward revision in prices of refined zinc and silver during the quarter. The net profit is expected to track the operating profit growth which is seen stable due to operating leverage.

 

The company, in which Vedanta Ltd. holds 63.42% stake and the government 29.54%, is likely to have earned a revenue of INR 79.43 billion in the quarter ended September, according to an average of estimates by four brokerages. The revenue is seen up nearly 17% on year and down 2.3% on quarter.

 

The company's net profit is seen at INR 22.72 billion, up 31% on year and down 3.7% on quarter. The Jul-Sep estimate for the operating profit, or earnings before interest, tax, depreciation, and amortisation, is INR 39.33 billion, up 16.7% on year and down 7% on quarter.

 

Earlier in the month, the company had said it produced 198,000 tonnes of saleable refined zinc in Jul-Sep, up 7% on year. This was an improvement over the 1% on-year growth in the June quarter. Sequentially, zinc production was down 6% in Jul-Sep, slightly more than 4?ll in the June quarter.

 

Hindustan Zinc produced 63,000 tonnes of saleable refined lead in the September quarter, up 12% on year and higher than 2% growth recorded in the previous quarter. Sequentially, production of refined lead was up 23%. In Apr-Jun, production of refined lead had declined more than 3%.

 

In the case of silver, the company's production in September quarter was 184 tonnes, up 2% on year. In the June quarter, silver production had fallen 7% on year. Sequentially, output was up 10% in Jul-Sept. In Apr-Jun, production of silver had fallen 12% on year.

 

Analysts expect the actual sales by Hindustan Zinc to be close to the production figures. The annual revenue growth in Jul-Sept will be driven by the rise in production growth of all the three metals, and the price movement in each of them. The average price of zinc in the September quarter was $2,784 per tonne, up 14.6% on year, and this, coupled with the 7% on-year production growth, is likely to give a big fillip to the overall revenue of the company.

 

Sequentially, however, the performance would be opposite. Not only did zinc production decline 6% on quarter, the average prices were also down 1.7% on quarter. This is likely to have dragged the company's overall revenue growth in the negative zone.

 

The average price of lead in Jul-Sep was down nearly 6% on year and 5.6% on quarter. This would partially spoil the benefit of a sharp production growth annually and sequentially. The average price of silver in September quarter rose 24.6% on year and was up 2% on quarter. This would aid the annual revenue growth of the company by a good measure.

 

The EBITDA is seen benefitting from the revenue growth in the three metals in Jul-Sep, and control over the operating costs. Hindustan Zinc's cost of production in September quarter, according to brokerage Nuvama Wealth, is expected to be around 2% lower on quarter.

 

The company will detail its earnings on Friday. Post-results, investors and analysts, according to brokerage Motilal Oswal Financial Services, will keenly watch for the company's guidance on volumes, realisations, and cost of production. "We await further insights on any other update related to the change in corporate structure, if any," the brokerage said.

 

At 1358 IST, shares of Hindustan Zinc were at 505.20 rupees on the National Stock Exchange, down 1% from Wednesday.

 

Following are the Jul-Sept earnings estimates of Hindustan Zinc based on reports compiled by Informist from four brokerage houses:

 

Brokerage firm	Net sales	Net profit	EBITDA
	----------(In INR million)---------
Antique Stock Broking Ltd	79,508	22,623	39,250
Kotak Institutional Equities	79,855	22,382	39,332
Motilal Oswal Financial Services Ltd	78,087	22,266	38,634
Nuvama Wealth Management Ltd	80,260	23,598	40,122
Average	79,428	22,717	39,335

 

End

 

US$1 = INR 84.04

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

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